The measures to tighten money in
circulation are said to push up commercial banks scrabble for deposits
in the market forcing the rates to climb in May.
The Bank of Tanzania (BoT) instituted
tight measures in first half of this year to rescue the shilling from
further collapse by reviewing statutory minimum reserve by 2.0 per cent
to 10 per cent.
The move, according to industry sources, increases the demand for deposits to make the costs of borrowing expensive.
Bank M Deputy Chief Executive Officer
Jacqueline Woiso told 'Daily News' earlier this week that the cost of
mobilising deposits was pushed up by liquidity tightness.
"The liquidity situation affects all
(money market) sectors, as there is no money in circulation," Ms Woiso
said, "it also affect lending position".
To counter the situation, Bank M planned
a right issue and senior debt in the second half of this year and
expects to raise 30bn/-.
The BoT May economic review shows that
on month-to-month basis the overall deposit rate averaged 9.01 per cent
compared with 8.10 per cent, while 12 months deposit rate rose to 10.66
per cent from 10.45 per cent.
Also, CRDB Bank Managing Director Dr
Charles Kimei said that as the result of money squeeze the demand for
deposits increased overtime to lift up costs.
He said CRDB looked for optional venues
to raise more fund for lending as customer deposits dwindled, among them
borrowing from international institution at reasonable costs.
Dr Kimei, who also is Tanzania Bankers
Association chair, said also CRDB is venturing on a fund mix to counter
deposits scarcity at the moment.
BoT report shows that interest rates on
loans were somewhat mixed, with overall lending rate easing to 16.10 per
cent from 16.22 per cent, while short-term lending rates (up to one
year) edged up to 14.27 per cent from 13.68 per cent.
"As a result, the spread between
12-month deposit and lending rates widened to 3.61 percentage points
from 3.23 percentage points in preceding month," the report shows.
The tight liquidity management
instituted by the central bank has pushed up banks' demand for deposits
driving up interest at the benefit of depositors.
Source: Daily News, reported from Dar es Salaam, Tanzania
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